Deep Dive into Durbin with the Industry’s Best

Pymnts.com has assembled a great group of experts to talk to us about the Federal Reserve Board’s regulation of debit card interchange fee–and what people in the payments business ought to be considering in light of these regulations, which should be in place by the end of April 2011. To watch the recorded webinar, click here.

EVANS: To my immediate right is Steve Cole. Steve founded and ran Cash Station, one of the largest ATM debit card networks.

After him, Tom Durkin was a senior economist at the Federal Reserve Board for more than 20 years, and Tom has written quite extensively on payment card regulation.

Down below, Ron Mann is professor of law at Columbia University. He’s a specialist in the law and regulation of this business.

And finally Tim Attinger was Global Head of Innovation at Visa up until a couple of months ago. Right now he’s a managing director at Market Platform Dynamics.

We’re going to be talking today among ourselves for about 30 minutes, just talking about the ins and outs of Durbin. And then we’re going to open it up for questions from all of you. If you want to ask a question you’ll see a box on the bottom right hand side of your screen. You can just type your question in there, and we’ll see it. And we’re going to try to get to as many of those questions as we can.

Tim, let me start with you. Maybe you could put all of this in context for us. What’s the role of debit cards and payments? And how do they fit into the overall relationship that banks have with their customers?

ATTINGER: Over the course of the past 10-15 years we’ve seen consolidation of national banks and the EFT networks along with them. We’ve also seen tremendous growth in use of those cards on the two major global card networks as consumers have shown an overwhelming desire to make everyday purchases against their deposit accounts.  The transaction revenues banks have generated from providing that anywhere, anytime access has allowed them to democratize deposit access and provide a range of services on those accounts.

In the context of that, financial intuitions have really been able to provide essentially free deposit services to the vast majority of the U.S. consumer population, some have said underpinned by the revenue streams that are driven to the financial institution by those debit cards.

So debit cards have become a primary relationship vehicle, a primary access vehicle for consumer spending, an increasing share of consumer spending, and a significant revenue stream that makes it possible for financial institutions to offer deposit accounts to consumers.

EVANS: So the regulation affects really one of the principal sources of revenue that banks get for issuing debit cards, then, from the DDA relationship?

ATTINGER: I would argue it not only affects one of the principal revenue streams for DDA relationships, it also affects a consumer behavior type accessing deposit funds. That’s a pretty big driver of economic growth. So, there’s a lot at stake in how this plays out.

EVANS: Ron, the Fed has nine months, or had nine months from the time the Dodd Frank bill was signed, that was I guess about July – the third week in July was signed into law to devise the regulations that it’s going to impose. What’s the process with the Fed to get there?

MANN: OK. I think the way to think about this is this is a pretty accelerated timeline for the Fed, and you can see it by comparing it to the Card Act. Most of the regulations required by the Card Act were pretty simple in the sense that they raise fairly simple policy ideas, like you can’t let people – you can’t make people pay overdraft fees unless they opt in. And that’s just a matter of drafting.

This statute is telling them to go out and answer a very complex, difficult factual question. How much does it cost to run a debit card transaction? And they have to answer that and write a regulation about it in just nine months. And they have to go through a lot of steps.

First they have to go out and get the information that’s necessary to even figure out what the relevant cost frameworks are, and how they differ across the industry, how they differ geographically, how they differ in any relevant respect. But after they do that, they have to take that information, figure out what they want the cost to be, send out a draft regulation, publish in the federal register. Get plenty of time for people to complain, because there’s going to be complaints no matter what they do. Then they have to take time to accommodate the complaints, write a final regulation and get that done in nine months. That’s going to have – they’re going to have move very quickly.

EVANS: And what if they can’t do it? Is there any possibility for them to say, you know what we really need a lot more time for this?

MANN: Well, I think they can – obviously they can say that, but I mean Congress is not going to revisit this and give them more time. I mean Congress is not going to go and pass another statute about interchange regulation between now and the end of 2010.

The Federal Reserve can fail to comply with Congress’s deadline, but that’s not going to allow the regulated bodies to sue them. The consumer groups can’t sue the Federal Reserve and say you were obligated to pass these regulations and you haven’t done it. That would go nowhere.

I think the real constraint the Federal Reserve faces is Congress has told them to do this in nine months. If they don’t do it, Congress will be unhappy with them.

EVANS: My understanding, Ron, is that they’re going to have to provide the public with the opportunity to come in on the draft regulations. When’s that supposed to happen?

MANN: Well, they – the Administrative Procedure Act governs this, they’re going to publish draft regulations, presumably. And then people have to have a reasonable notice and opportunity to comment. I think that the short timeframe will motivate them to give less time than they ordinarily do. But I think you should imagine something on the order of 30 to 90 days.

EVANS: So we ought to be seeing something towards the end of this year beginning of next year?

MANN: Yeah. Even that’s very quick for them. Because they have to have time to respond to all the comments. And if the regulations get challenged after they issue them, and they will, the administrative record is going to have to show that the Federal Reserve gave reasonable consideration to all the comments people filed. And you can assume there are going to be a large number of comments, and that some of the comments will be quite sophisticated.

If the issuers, for example, think the rates are set too low, they’re likely to introduce sophisticated economic analysis of the Fed’s data showing that the number is too low. And it will be difficult for the Fed to defend a regulation if they don’t consider that filing carefully before they issue the final regulation.

EVANS: Tom, before we get into the nitty-gritty of Durbin, you and I are both economists, and this is hardly the first time the government has imposed a cost-based regulation on an industry so I would like to tap into your experience as an economist. What other industries have gone through this?

DURKIN: Well, there have been other industries, historically. Certainly public utilities are well known, electric utilities, telephone, telecommunications and so forth. There’s also been regulation – cost-based regulation in the transportation industry in the past and airlines and trucking and so forth. There’s been regulation of financial services as well. Sometimes a little bit less well known, but important nonetheless, consumer finance companies, for example, have been regulated in the past on a cost basis. Sometimes people have said that it’s a public utility type regulation for them. There’s been state regulation on a cost basis in the insurance area. There’s also been regulation on some other bases for such things as credit cards and other sorts of financial services as well.

So you’re right, it’s absolutely – it’s not new. Although this exact approach is new for payments cards.

EVANS: The legislation says that the Fed is supposed to limit the amount that issuers can receive to the “incremental cost” of authorizing and clearing the transactions. And there’s an additional factor for fraud and so forth. Any thoughts on how the Fed is likely to interpret those two words, incremental cost?

DURKIN: Just by itself incremental cost, the two words is fairly simple and straightforward. It just means additional costs based upon, in this case, a certain kind of transaction. But it’s really a lot more complicated than that. It involves such things as the types of transactions, the – what goes into the basis that the Federal Reserve considers when it’s looking at the increment, or the additional cost.

And so there’s an awful lot of things that they have to consider and that is evidenced by their recent foray into gathering data, which they’re going to gather a lot of data.

EVANS: What kinds of questions should the banks be thinking about in analyzing their own costs in anticipation of this?

DURKIN: The banks certainly want to provide – I’m sure they want to provide good numbers for the Federal Reserve in the same way the Federal Reserve wants to receive them. But the banks costs accounting systems, their management information systems, aren’t necessarily set up the same way that the Fed’s questionnaire is. And so they’re going to have to do very careful analysis themselves to make sure their categories meet the Fed’s. And if they have to d some allocations or some splitting, and the Fed’s data gathering suggests that they’re expecting that sort of thing, that the banks are going to have be very careful to make sure there’s no double counting, or that there’s no under counting, that there’s no categories that are missed.

And so it’s going to be a rather lengthy, difficult process for the banks.

EVANS: Very good. Ron, I’ll assume the legislation refers to costing reasonable and proportional. How much flexibility do you think the Fed has, legally, in interpreting the cost standard that Section 1075 has delivered to them?

MANN: I think they have a lot of flexibility. And there’s flexibility they have on several fronts. Obviously the one that’s immediately front and center is the one that Tom was just talking about, which is how strictly are they going to interpret incremental costs? Because they could read incremental costs in a way that would set a figure that would be far below the average total costs of running the transactions and leave those transactions as substantial losers for the networks.

I don’t think that the provisioning you’re talking about really should give banks much comfort on that particular issue. Because what it says is that the substance of the statute is that the interchange fee has to be reasonable and proportional of the cost incurred by the issuer. And then they tell the Federal Reserve to write a regulations for assessing whether banks have done that. And then they tell them, in prescribing the regulations they have to distinguish between incremental costs and other costs, and the other costs they can’t consider.

So, they’ve been told pretty clearly that there has to be something that’s not incremental costs. And whatever that is they can’t consider it in deciding what a reasonable and proportional fee is. So, I think that’s fairly unsatisfying to the financial institutions.

EVANS: Steve, you ran an ATM network for a long time. What does all this mean from the standpoint of the pen and signature networks?

COLE: Well, the topography of networks has changed quite a bit. Now there’s three remaining big networks, Pulse, NYCE and STAR are all owned by publically traded companies, none of whom are necessarily promoting the brands of those networks. Last year I believe that Visa and MasterCard debit volume exceeded the credit volume. So what I anticipate is that the signature portion of debit is going to continue to grow disproportionately, to PIN in large part because the brands surrounding the PINs are not being promoted.

And the other problem with PINs is that they haven’t found out a way to technologically secure the PIN on the internet, which is increasingly for e-commerce use. And the Visa and MasterCard debits are well accepted and securely accepted on the internet.

So, I see signature continue to grow in leaps and bounds. Merchants will particularly, with lower cost in them, will continue to perhaps incrementally promote the acceptance of signature debit at their locations because it’s going to cost them less.

EVANS: Here’s a question for everyone since I suspect no one really knows the answer to this for sure. How are these regulations likely to get implemented? So the cost of debit probably varies across banks, plus the little guys, the under $10 billion financial institutions are exempted. Is every financial institution – banks, thrifts, credit unions and so forth – going to be able to set its own interchange fees? Or is something else going to happen? And let me start out by turning to Tim, and then after that I’ll turn to Ron. Tim what do you think?

ATTINGER: I just don’t see how that can happen. There are over 15,000 financial institutions in the United States. Merchants need some consistency of expectation. Merchant acquirers need some consistency of fee expectations so they can then drive their fee structures on top of that. I think these will continue to be managed at the network level.

You may see, quite frankly, individual negotiated deals between financial institutions on both sides, acquiring and issuing, with the networks that might give them an effective rate that is differential. But I don’t think that there’s any practical way to implement anything but centralized management of these fees at the network level.

EVANS: And you see that as a single fee or multiple fees?

DURKIN: Well, I think as you have it today, technologically there’s noting that prevents a network from having individual fees at the individual financial institution at – for individual merchants, for particular card types. That complexity is certainly there. And it’s there, I think, to some extent to optimize the value exchange between the merchant acquirer and the issuer with relation to who’s bringing the value to the table from a merchant and consumer perspective. But be that as it may, I think less complexity in the fee structure of the network level will be the rule, at least on the merchant facing side.

One of the interesting outcomes may very well be that for medium and small merchants in the U.S. marketplace who have, to date, gotten essentially a bundled price from their merchant acquirer that hides a lot of the differential fee structures between a Visa debit card and an AmEx product, they may go to a cost plus-based pricing in much the same way as the large merchants do today. So they would have more transparency into those differential rates. But I don’t think you’ll be managing multiple rates across a product for multiple banks.

EVANS: What are you thoughts, Ron?

MANN: I agree with Tim. I do not imagine – I just can’t imagine a world in which when you walk into a store and you use a debit card from your credit union, it’s going to cost the merchant 50 basis more than if you use a Visa, MasterCard product. I just can’t imagine that happening. Issued by a major bank.

I think – well, what it presages for me is whatever the story is for why that doesn’t happen, antitrust litigation gets the networks by the small issuers complaining that they aren’t getting a better price, because Congress said they’re supposed to get a better price. And when the networks and the large issuers figure out a way for that not to happen, antitrust complaints is the basis for that not happening is unlawful.

EVANS: Tom and Steve, do you guys have any thoughts on that or should I move on?

COLE: You can move on.

DURKIN: Well, I think that – I don’t disagree with what either Ron or Tim has said. I think, though, that it’s interesting how the Federal Reserve has started to engage in what might – one might characterize as a massive data gathering effort, considering at least how short a period they have to gather it and analyze it. So even though they may end up with a simpler structure than their data gathering might now look like it involves, they certainly are going to consider a lot of things. They’re going to consider a lot of things, even if they don’t do all of those things.

EVANS: Thanks, Tom. Steve, turning to you, banks could lose a lot of revenue under at least some of the scenarios we’ve heard about from Tom and Ron depending upon how incremental cost is considered. What sorts of adjustments will banks probably need to consider in their customer relationships going forward in time?

COLE: The interesting thing here is there will be a great temptation, I think, to mimic credit card pricing. And I think what financial institutions need to be careful about, is while credit is a privilege, meaning I’m paying to use somebody else’s money, debit is access to my own money. You may recall many of you, 15 years ago First National Bank of Chicago charging a $3 teller fee which didn’t go over too well, because people were objecting to being charged three bucks to access their own money.

So I think explicit transaction pricing on debit transactions, or monthly fees or annual fees will not play well with consumers. Now this is without any benefit of any consumer research, it’s gut on my level. But my guess is that would be what the research suggests.

What I think might be well worth considering by financial institutions is, while they all have bundled pricing for their high net worth customers based upon products and services they use, traditionally within credit unions and banks and thrifts, you haven’t gotten below the high net worth for a private banking individual to have that relationship pricing up here at the middle markets and the lower levels. There might be some opportunities here to move market share for the first movers for financial institutions who react that way, to recoup the lost revenue from interchange fees in different ways where they’re linking products and services together at a more comprehensive pricing package.

ATTINGER: I think, Dave, I would just have to agree with that. That as you look at the opportunities for innovation and for new product and service capabilities in the context of this really significant and interventionist regulation, I think it creates a lot of opportunity for financial institutions to segment their consumer portfolios, identify those, as Steve said, those bundles, of products that they can price reasonably to those consumers, that fit that consumer behavioral need. Certainly there’s the opportunity to drive incremental service revenue, I think, from providing more information about the accounts in real time. If you don’t have a mobile strategy right now, you’ve got to get one pretty quick because the market’s moving in that direction. There’s certainly the opportunity to bundle together other financial products and services from elsewhere in the financial institutions to make that relationship more valuable. I think we’ll see consumers consolidating accounts with multiple financial institutions. So there are certainly growth opportunities here.

And I think on the side of rewards, there may be an opportunity to get merchants more directly engaged with financial institutions in the delivery of real time benefit to consumers in a way that can continue to sustain those value propositions that consumers have come to expect with the debit card access, and get merchants more directly involved in that value.

EVANS: And do you see any other opportunities, Tim, for innovation in the face of adversity that banks ought to be thinking about? Now we are moving from sort of the pricing side, but just in terms of thinking about product and so forth?

ATTINGER: Well, I certainly think we will see, as Steve said, more relationship-based products. Certainly tighter segmentation of consumer populations within the existing portfolio. There will certainly be a lot of competition for consumer relationships. I don’t think, as Steve said, you can fee your way out of this. But remote service delivery, whether that be either a web-based or mobile browser-based, or a native app-based information service that gives consumers real time access to the information around their account, particularly the relationship products that they’ve got with that financial institution. And I think, quite frankly, then driving a lot more consumer self selection into what products and services, or what feature bundles they are interested in having will help financial institutions try to sustain the fundamental way that consumers have decided to access their deposit funds in a way that may be financially viable.

EVANS: Ron, what are the biggest ambiguities in the legislation that the Fed and the courts are going to have to grapple with in the next few months, and in the coming years?

MANN: I think traditionally they’ve had these types of deadlines where they’ve had to try and set standards for how banks behave they use a blend of styles and fit them together. So they’ll do something like they’ll establish a price level and then let the banks charge more that if they can prove that on a case by case basis or a class by class basis there’s a group of transactions that are systematically more expensive.

And I think that’s what Tom’s getting at, this data collection they’re doing is really massive. They’re asking lots of questions about lots of things. That leaves them the flexibility of making the fee structure more precise. They have to decide things like should it be a fixed fee, should it have a floor with a pro rata element and then a cap? All of those are things where you see in the industry now a blend of different pricing structures. They’re going to have to pick some combination of those to set as the cap. And I think that’s going to be very challenging for them.

That’s not necessarily an ambiguity as much as a challenge. The central ambiguity has to be the one Tom mentioned early on which is exactly what costs count as incremental cost. Because I think they’re going to be highly motivated to find a way for incremental costs to equal the average cost of processing the transactions. And how to get that out of the statute.

EVANS: Tom, related to that, we know that the Fed is out there collecting reams of data. I think they’ve given the financial institutions a few weeks to go through the process of collecting it and sending it in. Generally what’s – speaking just as an economist who has some experience in this area, what’s the Fed going to do with all that data?

DURKIN: They’re going to do some kind – it seems pretty clear they’re going to do some kind of statistical analysis, probably fairly sophisticated statistical analysis. They have a couple things going for them in that, and that is they have the personnel who have the experience that they can do that sort of thing. And they also have the intellectual interest in doing it. And while it’s a lot of data I think it’s going to generate internal enthusiasm there to get into the data and work with it. And it will be interesting to see what they come up with.

EVANS: Well, thanks a lot guys, we have a few questions from people in the audience. And if anyone else has any questions now’s a great time to tap them in. We’re going to spend a few minutes just having me take some of the questions that you all raised and asking our panel members what their thoughts on it are.

Is there any chance interchange fees will be set at levels that are above current rates?

MANN: I think the answer’s probably no.

EVANS: And Tim and Tom and Steve, I gather you would agree with that?

COLE: Yes.

ATTINGER: Well, I think generally that’s true. Although, again, because this is such a massive undertaking and very much a data driven exercise in a really complex – really complex ecosystem.

MANN: I think if the Fed’s had rates above current levels people in Congress would be so predictably outraged that the Feds would never dare to do it.

EVANS: Next question, has Durbin covered decoupled debit? Ron, I think that’s possibly a legal question. Do you want to take that one?

MANN: That’s a question for me. I think that’s a hard question. You know I think it – my general answer is probably yes. Of course, decoupled debit, as far as I know, is not spread as successfully as the innovation of the idea might have suggested. But the statute generally applies to an entity that directly or indirectly routes information and data to conduct debit card or debit card transaction authorization clearance and settlement.

Now I think you can argue that if someone is running a decoupled debit product, and if the way that they’re processing the transactions is they, on the acquisition side, collect the information and then they send ACH transfers through the ACH network to settle them. If that’s the way they’re doing decoupled debit, which at least as I understand it, is how several of the programs have operated, I think you have a good case that that’s not a payment card network because they aren’t routing information due to the clearance and settlement. The clearance and settlement happens through ACH.

COLE: If I were a participant or an offer of decouple debit I would object strenuously to any new pricing of applying that. Because one, it’s generally private label, it’s unbranded. And two, you’re using ACH to clear and settle, which has nothing to do with the traditional branded debit card network. So I think it would be wholly inappropriate for this new pricing to apply to decoupled debit.

MANN: Well, the difficultly is the definition of the payment card network says it needs an entity that directly or through processors or agents does this stuff. Now my view, personally, if I was the one writing the regulations would be that neither directly not indirectly does Capital One decoupled debit program provide proprietary services, infrastructure, and software to clear and settle. They authorize the transactions, but they clear and settle them through ACH. And so I would – my view is it shouldn’t apply to that. But I think it’s fairly vague.

COLE: Well, if I was an issuer I’d love it. If I were an acquirer I wouldn’t like it.

EVANS: Let’s try one more question, and this one, Tim let me aim it to you. But Steve, you may have a thought as well.

One question is, since the cost associated with signature debit and the incidence if fraud is much higher, why would signature debit be encouraged by any party? And I think the implication of this, why would it be encouraged by any party after the regulations go into place?

ATTINGER: Well I think one of the things that Steve had mentioned earlier, the reason why signature debit would continue to be propagated and supported, not only by financial (break in audio) consumers that are using them, is the ubiquity of acceptance. Steve had mentioned on a Visa or MasterCard debit product access to 30 to 32 million, certainly access from a remote standpoint through those networks. So there’s certainly an acceptance advantage there. Quite often that also comes with a high degree of a risk management and infrastructure.

So are incidents of fraud higher on signature debit? Well, is that a function of as a share of the overall portfolio? Or just in absolute terms? I’m sure that it’s true in absolute terms.

EVANS: Here’s an interesting question, which I think follows up the comment, one of the comments that was just made. What about on a transactions, would – that would never potentially touch a payment network. I think this is a question for you, Ron. If it’s a transaction that never touched a payment network, is that subject to Durbin?

MANN: I think my first answer is that when you have legislation written by Congresspeople without a chance for it to get reviewed by the Federal Reserve or bankers or people in the industry, it doesn’t work very well. The difficulty you face there is that the – you have to look at the definition of electronic debit transactions. And that’s a question I haven’t thought about.

COLE: You don’t care, because you’re just paying yourself. So whether it applies or not is kind of economically irrelevant.

ATTINGER: Well, maybe Steve. I mean as you think about large institutions that have significant deposit relationships on the consumer side, and fairly large relationships on the merchant side, even thought they route those transactions through one of the branded card networks, they still have the same – their customer on both sides of those transactions. That doesn’t mean necessarily that both sides of that business are tied to each other in any significant way.

MANN: I think when you look at the statute it’s pretty clear that what governs coverage is the card, not the relationship between the acquirer and the issuer. Because it’s a card that the issuer approved for use through a payment card network to debit an asset account. And so if you have a Visa or MasterCard product, it happens that you use it at a merchant who’s – merchant side relationships are all with JPMorgan Chase, and the card is issued by JPMorgan Chase, statute applies.

EVANS: Here’s a question really for Tim and – Tim and Tom. We talked a lot in the last 40 minutes or so about the incremental cost of authorization and clearing. But of course section 1075 also provides this kicker for fraud and security costs and we know a lot of the questions the Fed is asking about actually go to that subject.

How do you see fraud and security costs being factored in to the interchange fee calculations? And what implications do you think that’s going to have for how the banks deal with fraud and security? Tim and Tom, do you have any thoughts on that?

DURKIN: It seems to me that the legislation appears to suggest that there are two separate items and that fraud costs and possibly incremental fraud prevention costs are separate from incremental costs for processing an individual transaction. And so while the individual transactions are regulated or subject to the regulation, it seems like the fraud costs and incremental fraud costs prevention that may be put into place are additional to that. And so they would be separate. And I suspect that’s why the Federal Reserve has collected a lot of information on both of those so that they can study both of them independently.

ATTINGER: I think the challenge in this may very well be, Dave, that as financial institutions – certainly as networks look at fraud related costs and the systems that secure or lower the risk on those transactions, you’re looking at bundles of transactions across, not only multiple financial institutions, but quite often multiple product types, which include looking at a portfolio of transactions at the financial institution level that are beyond just the debit card access to the DDA. And certainly from a financial institution perspective, much more of the risk management, the fraud management, the loss mitigation is at the relationship, the portfolio and the deposit account level, and not specifically unique to a DDA access vehicle, whether that’s a debit card or a check or cash access.

So suppressing investment or recovery of costs on one particular product could have adverse consequences in where the fraud migrates elsewhere.

EVANS: We could obviously go on for probably another hour, perhaps another week or another month on this topic. Let me toss out one last question for all of you, which again goes to a topic we haven’t really addressed yet. I’ll just read the question that we got on in this.

How will Durbin’s exclusivity and routing provisions impact the industry? Will the Fed interpret the statute as requiring two signature processing options on each card? Ron, do you want to take that first, and then maybe Tim?

MANN: Maybe not. I think that’s a hard question. I think it’s very hard to tell what the Fed’s going to do with that. I just don’t think I can even speculate, sorry.

EVANS: Tim, do you have any thoughts just generally on how the router requirement and exclusivity requirement are going to impact the industry overall?

ATTINGER: Happy to wade into that one. I think the tone of that particular piece of the legislation is around ensuring that there are routing options for merchants off of that product type. And typically that routing option provision has been a question of signature versus PIN, and how you facilitate both of those capabilities off of the same product.

There have been, obviously traditionally, multiple PIN networks available on a particular product. But I just don’t see from a practical reality standpoint, how you can manage multiple networks, particularly multiple signature networks, and multiple PIN networks all at once off of one single product type and expect either merchants or merchant acquires to be able to know how to price through those, consumers to know what value proposition they’re accessing when they get to the deposit access at the point of sales. And certainly there’s no way financial institutions to manage the P&L of that business with that level of complexity on the front end. I just don’t think from a practical standpoint product level routing or exclusivity provision remedies make a lot of sense. I think what they’re speaking to there is financial institutions should not be compelled to have only one network participation in their portfolio. And quite frankly, that has been the case from a business perspective for years. There are no true exclusivity provisions in financial institution contracts with networks. They’re all around driving incremental participation and paying for growth with incentives as opposed to saying thou shalt not have this network on the back.

EVANS: We’ve gotten a number of questions that I’m not going to pose to you about how much of a hair cut or head chop the financial institutions will take on debit card interchange fees, how much debit card interchange fees are going to decline as a result of the Fed. I’m not going to ask you that question in part because none of us have taken side bets on this, and without the opportunity to bet on who gets the answer right I don’t want to really pose that question to you. I guess the one thing I – one point I would make to the audience is one can read a lot into the statement in the legislation that the Fed has to pay attention to incremental costs. And I would suggest that there are other parts of the world that have gone through similar exercises and there’s probably some insights that we can all glean from that. But I’m not going to offer, or ask anyone else to offer, a prediction, at least on this telecast today.

So Steve, Tom, Ron and Tim, thank you all very much for your insights today. This is obviously an area where there are many, many questions to be asked. And there’s going to be lots of debate over this over the next two months, and possibly longer than that. And we’re obviously all going to wait and see what the Fed ultimately proposes here.